Monthly Archives: March 2012

Notice 2012-20 provides guidance relating to the portfolio interest exception, the short term debt exception under section 1.6049-5(b)(10), and the excise tax under section 4701 in connection with the repeal of section 163(f)(2)(B)(the bearer debt repeal).

Notice 2012-20 will be published in the Internal Revenue Bulletin 2012-13, dated March 26, 2012.

The foregoing rules generally do not apply with respect to bearer debt that complies with the foreign-targeting rules of section 163(f)(2)(B) and the regulations thereunder. However, section 502 of the HIRE Act generally eliminated the various exceptions for foreign-targeted bearer debt, effective for obligations issued after March 18, 2012. As a result of this change in law, with respect to obligations issued after March 18, 2012, the portfolio interest exception will be available only for obligations issued in registered form.

Addressing the due process clause, Judge Susan Reisner said, “[t]axing a business based on its employing one full-time employee in the taxing state does not violate the Due Process Clause.” She added the corporation, Telebright Corp. Inc., “has sufficient ‘minimum connection' with this State to permit taxation consistent with the Due Process Clause.”

Under Section 311 of the Patriot Act, Treasury can take a range of measures against foreign governments or financial institutions that engage in money laundering. The senators’ amendment gives Treasury the same tools to combat foreign governments or financial institutions that significantly impede U.S. tax enforcement. For example, Treasury could prohibit U.S. banks from accepting wire transfers or honoring credit cards from banks found to significantly hamper U.S. tax enforcement efforts.

Modifications made earlier in the day to the amendment (S. Amdt 1818) by Sen. Carl Levin (D-Mich.) made the amendment more amenable to senators of both parties by saying Treasury could stop the transactions of tax havens and financial institutions that “significantly impede” U.S. tax enforcement.

The final version of the amendment also added language noting that if a jurisdiction or financial institution is cooperating with the United States, that fact may be favorably considered in evaluating whether it is significantly impeding enforcement. Staff said the amendment would raise $900 million over 10 years.

“Each year the United States loses literally tens of billions of dollars from people using offshore tax havens to dodge their tax obligations,” Levin said on the Senate floor.

A final vote on the measure is expected on March 13, 2012. Then it is off the the Republican controlled House of Representatives, where is may not receive such a warm reception.

It’s time to put an end to offshore tax abuses that allow tax cheats to profit at the expense of honest taxpayers,” said Whitehouse. “I’m proud to support Senator Levin’s amendment, which will give the U.S. Treasury greater powers to crack down on offshore tax abusers and the banks that aid them.”

Stay tuned... Same Tax Times... Same Tax Channel!

That’s according to a study released by the Florida Yacht Brokers Association and the Marine Industries Association of South Florida.

The new law puts an $18,000 sales-and-use tax cap on boats purchased or brought into Florida. The new sales-and-use tax cap generated in excess of $13.46 million in direct sales tax revenue for the state, compared with a $1.5 million first-year loss that a Florida legislative staff analysis had projected.

Thomas J. Murray and Associates Inc. conducted the initial research and subsequent survey.
Prior to July 1, 2010, all boats sold and or delivered in Florida were subject to a 6 percent sales-and-use tax unless they were specifically exempt. A new 34-foot powerboat that cost $400,000, for example, would cost $24,000 more in taxes.

Among the survey’s findings:

• The average sales price for post-cap transactions in Florida was $907,002 — nearly double the pretax value of closings that took place in Florida prior to the cap.

• In the post-cap era, transactions for which either no sales tax was paid or the closing was conducted out of state dropped from 21.5 percent in the pre-cap era to an estimated 12.8 percent after the sales tax cap was implemented.

“The results of our survey research demonstrate beyond a doubt that setting a reasonable tax basis for high dollar purchases provides an incentive for more boats to be purchased, provisioned and kept plying the waters of Florida,” FYBA spokesman Jeff Erdmann, owner of Bollman Yachts of Fort Lauderdale, said in a statement. “More boats sold and registered in Florida means more business and jobs for Floridians.”